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Press release from Business Wire

Tetra Tech Reports Fourth Quarter and Fiscal 2012 Results

<ul> <li class='bwlistitemmargb'> <b>Q4 Net Revenue up 13% to $536 million</b> </li> <li class='bwlistitemmargb'> <b>FY12 Net Revenue up 13% to $2.02 billion</b> </li> <li class='bwlistitemmargb'> <b>Record backlog up 10% to $2.14 billion</b> </li> </ul>

Wednesday, November 07, 2012

Tetra Tech Reports Fourth Quarter and Fiscal 2012 Results16:05 EST Wednesday, November 07, 2012 PASADENA, Calif. (Business Wire) -- Tetra Tech, Inc. (NASDAQ: TTEK) today announced results for the fourth quarter and fiscal year ended September 30, 2012. Fourth Quarter Results Revenue in the fourth quarter was $719.4 million compared to $675.7 million in the same period last year. Revenue, net of subcontractor costs1, in the fourth quarter was $536.3 million, up 12.7% compared to $475.9 million in the same period last year. Operating income was $48.5 million, up 11.6% compared to $43.4 million in the fourth quarter last year. Diluted earnings per share (EPS) were $0.47, up 11.9% compared to $0.42 in the fourth quarter last year. Diluted EPS included costs related to the reorganization of the Company's operations, including the elimination of the Engineering and Architecture Services (EAS) segment, and purchase accounting-related adjustments, resulting in a net diluted EPS reduction of $0.01. Earnings before interest, taxes, depreciation, and amortization (EBITDA2), were $62.9 million, up 11.5% compared to $56.4 million in the fourth quarter last year. Backlog was a record high $2.14 billion, up 9.7% compared to $1.95 billion at the end of the fourth quarter last year. Cash generated from operations was $29.8 million compared to $33.2 million in the fourth quarter last year. Fiscal Year Results Revenue for fiscal 2012 was $2.71 billion compared to $2.57 billion in fiscal 2011. Revenue, net of subcontractor costs, was $2.02 billion, up 12.8% compared to $1.79 billion in fiscal 2011. Operating income was $166.4 million, up 13.6% compared to $146.4 million in fiscal 2011. Diluted EPS were $1.63, up 14.0% compared to $1.43 in fiscal 2011. EBITDA were $222.3 million, up 11.9% compared to $198.6 million in fiscal 2011. Cash generated from operations was $158.0 million, up 20.1% compared to $131.6 million in fiscal 2011. Tetra Tech's Chairman and CEO, Dan Batrack commented, “Tetra Tech finished the year with a strong fourth quarter that resulted in 13% net revenue growth and 10% backlog growth. Based on net revenue, our international business is now the largest client sector and the fastest growth market, having grown 19% organically in the fourth quarter. Our record backlog, expansions into Brazil and oil & gas, and the realigned organization provide a solid foundation for continued growth in 2013.” 1 Tetra Tech's revenue includes a significant amount of subcontractor costs and, therefore, the Company believes revenue, net of subcontractor costs, which is a non-GAAP financial measure, provides a valuable perspective on its business results. 2 EBITDA is a non-GAAP financial measure. The Company believes EBITDA is a useful representation of operating performance because of significant amounts of acquisition-related non-cash amortization expense. A table reconciling net income attributable to Tetra Tech to EBITDA can be found at the end of this release.     In thousands (except EPS data)Three Months EndedFiscal Year Ended Sep. 30, 2012   Oct. 2, 2011 Sep. 30, 2012   Oct. 2, 2011 Revenue $ 719,405 $ 675,662 $ 2,711,075 $ 2,573,144 Subcontractor costs   (183,149 )   (199,724 )   (689,005 )   (780,817 ) Revenue, net of subcontractor costs 536,256 475,938 2,022,070 1,792,327 Operating income 48,470 43,433 166,367 146,422 Interest expense, net (1,389 ) (1,452 ) (5,571 ) (5,930 ) Income tax expense   (16,542 )   (14,582 )   (56,064 )   (47,510 ) Net income including noncontrolling interests 30,539 27,399 104,732 92,982 Net income attributable to noncontrolling interests   (107 )   (1,000 )   (352 )   (2,943 ) Net income attributable to Tetra Tech $ 30,432   $ 26,399     $ 104,380   $ 90,039   Earnings per share attributable to Tetra Tech: Basic $ 0.48   $ 0.42   $ 1.65   $ 1.45   Diluted $ 0.47   $ 0.42   $ 1.63   $ 1.43     Weighted-average common shares outstanding: Basic 63,623 62,310   63,217 62,053 Diluted 64,396 62,864   63,934 62,775   Business Outlook The following statements are based on current expectations. These statements are forward-looking and the actual results could differ materially. These statements do not include the potential impact of transactions that may be completed or developments that become evident after the date of this release. The Business Outlook section should be read in conjunction with the information on forward-looking statements at the end of this release. Tetra Tech expects diluted EPS for the first quarter of fiscal 2013 to be in the range of $0.37 to $0.41. Revenue, net of subcontractor costs, for the first quarter is expected to range from $490 million to $540 million. For fiscal 2013, Tetra Tech expects diluted EPS to be $1.80 to $1.95. Revenue, net of subcontractor costs, for fiscal 2013 is expected to range from $2.1 billion to $2.3 billion. Webcast Investors will have the opportunity to access a live audio-visual webcast and supplemental financial information concerning the fourth quarter results through a link posted on the Company's website at www.tetratech.com on November 8, 2012 at 8:00 a.m. (PT). About Tetra Tech (www.tetratech.com) Tetra Tech is a leading provider of consulting, engineering, program management, construction management, and technical services. The Company supports government and commercial clients by providing innovative solutions to complex problems focused on water, environment, energy, infrastructure, and natural resources. With more than 13,000 employees worldwide, Tetra Tech's capabilities span the entire project life cycle.     Tetra Tech, Inc.Regulation G InformationReconciliation of Net Income to EBITDA   In thousandsThree Months EndedFiscal Year Ended Sep. 30, 2012   Oct. 2, 2011 Sep. 30, 2012   Oct. 2, 2011 Net income attributable to Tetra Tech $ 30,432 $ 26,399 $ 104,380 $ 90,039 Interest expense, net 1,389 1,452 5,571 5,930 Income tax expense 16,542 14,582 56,064 47,510 Depreciation 6,994 6,737 26,651 27,138 Amortization   7,552   7,232   29,634   27,979 EBITDA $ 62,909 $ 56,402 $ 222,300 $ 198,596   Forward-Looking StatementsThis news release contains forward-looking statements that are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include information concerning future events and the future financial performance of Tetra Tech that involve risks and uncertainties. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results. Readers are urged to read the documents filed by Tetra Tech with the SEC, specifically the most recent reports on Form 10-K, 10-Q, and 8-K, each as it may be amended from time to time, which identify risk factors that could cause actual results to differ materially from the forward-looking statements. Among the important factors or risks that could cause actual results or events to differ materially from those in the forward-looking statements in this release are:worldwide political and economic uncertainties; the effect of the Budget Control Act of 2011; fluctuations in annual revenue, expenses and operating results; the cyclicality in demand for U.S. state and local government and U.S. commercial services; credit risks associated with certain U.S. commercial clients; concentration of revenues from U.S. government agencies and potential funding disruptions by these agencies; violations of U.S. government contractor regulations; dependence on winning or renewing U.S. federal, state and local government contracts; the delay or unavailability of public funding on U.S. government contracts; the U.S. government's right to modify, delay, curtail or terminate contracts at its convenience; risks associated with international operations; the failure to properly manage projects; the loss of key personnel or the inability to attract and retain qualified personnel; the use of estimates and assumptions in the preparation of financial statements; the ability to maintain adequate workforce utilization; the use of the percentage-of-completion method of accounting; the inability to accurately estimate contract risks, revenue and costs; the failure to win or renew contracts with private and public sector clients; acquisition strategy and integration risks; goodwill or other intangible asset impairment; growth strategy management; backlog cancellation and adjustments; the failure of partners to perform on joint projects; the failure of subcontractors to satisfy their obligations; requirements to pay liquidated damages based on contract performance; changes in resource management, environmental or infrastructure industry laws, regulations or programs; changes in capital markets and the access to capital; credit agreement covenants; industry competition; liability related to legal proceedings; the availability of third-party insurance coverage; the ability to obtain adequate bonding; employee, agent or partner misconduct; employee risks related to international travel; safety programs; conflict of interest issues; liabilities relating to reports and opinions; liabilities relating to environmental laws and regulations; force majeure events; protection of intellectual property rights; the interruption of computer, information and communications technology and systems; the ability to impede a business combination based on Delaware law and charter documents; and stock price volatility. Any projections in this release are based on limited information currently available to Tetra Tech, which is subject to change. Although any such projections and the factors influencing them will likely change, Tetra Tech will not necessarily update the information, since Tetra Tech will only provide guidance at certain points during the year. Readers should not place undue reliance on forward-looking statements since such information speaks only as of the date of this release. Tetra Tech, Inc.Jim Wu, Investor RelationsTalia Starkey, Media & Public Relations626-470-2844